Feb 3 (Reuters) - Goldman Sachs upgraded Dick's Sporting Goods Inc to 'buy' from 'neutral,' saying the retailer offers good unit growth prospects and the stock's valuation provides an attractive entry point.
Dick's Sporting has solid free cash flow for a growth retailer and is effectively reducing its net debt balance, a move that will position it to fund store build-outs as landlord financing remains tight, Goldman Sachs analyst Matthew Fassler wrote in a note to clients.
Dick's Sporting remains a best-in-class merchant, with the ability to manage inventory deftly, he said.
The analyst expects gross margin recovery in 2010 as the firm cycles investment in its Golf Galaxy clearance. The severe margin pressure associated with clearance and merchandise repositioning is essentially complete, Fassler said.
Fassler, who has a price target of $27 on the stock, said the sporting goods retailer's decision to reinvest in infrastructure is reflected in his forecasts, which stand above consensus.
'We could see further upside to our 2010 projection,' he added.
(Reporting by Viraj Nair in Bangalore; Editing by Vinu Pilakkott) Keywords: DICKSSPORTING/RESEARCH GOLDMANSACHS (viraj.nair@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: viraj.nair.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Dick's Sporting has solid free cash flow for a growth retailer and is effectively reducing its net debt balance, a move that will position it to fund store build-outs as landlord financing remains tight, Goldman Sachs analyst Matthew Fassler wrote in a note to clients.
Dick's Sporting remains a best-in-class merchant, with the ability to manage inventory deftly, he said.
The analyst expects gross margin recovery in 2010 as the firm cycles investment in its Golf Galaxy clearance. The severe margin pressure associated with clearance and merchandise repositioning is essentially complete, Fassler said.
Fassler, who has a price target of $27 on the stock, said the sporting goods retailer's decision to reinvest in infrastructure is reflected in his forecasts, which stand above consensus.
'We could see further upside to our 2010 projection,' he added.
(Reporting by Viraj Nair in Bangalore; Editing by Vinu Pilakkott) Keywords: DICKSSPORTING/RESEARCH GOLDMANSACHS (viraj.nair@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: viraj.nair.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
© 2010 AFX News
